See which microfinance companies have performed better than the industry based on their major indicators as of Q3 of FY 2073/74
- ShareSansar, May 16, 2017 on Company Analysis , Exclusive , Featured , Financial Analysis , Latest , Stock Market
All the listed 12 national level microfinance that have published the quarterly reports till Chaitra 2073/74 have been analyzed in this report. They are ranked in terms of growth in their major parameters:
- Reserves and Surplus
- Loans and advances
- Net interest income
- Operating profit
- Earnings per share (EPS)
- Net worth per share
- Price/earnings ratio (P/E Ratio)
By comparing the microfinances on these nine major indicators with the industry average, it was then observed which microfinances were superior to the industry.
Paid Up Capital
Reserve and Surplus
Reserves and surplus are the amount left after distributing dividends to the shareholders. Higher the amount of reserves, higher will be the strength of the companies and vice versa. Reserves are also free source of capital of the companies.
The industrial average growth in case of reserves and surplus was 24.20%, where 5 microfinances performed better than the industry. Laxmi Laghubitta made it to the top by increasing its reserves by 183.79%. Nirdhan Uthhan, First Microfinance, Mero Microfinance and Nerude were also among the top companies. By the end of Chaitra 2073, average reserve stood at Rs. 44.87 Crore.
Borrowings are the major source of financing in terms of microfinances as microfinances provides loans to its clients from borrowings. Only few microfinance companies collect deposits from public. Majority of lendings are given from borrowings.
The industrial average growth in case of borrowings was 23.44%, where 8 microfinances’ borrowings are greater than industrial averages. ILFCM Microfinance made it to the top by increasing its borrowings by 224.94%. Vijaya Laghubitta, Nerude Laghubitta, Laxmi Laghubitta and Mahila Microfinance were among the top companies. Sana Kisan Bikas Bank, First Microfinance and Mero Microfinance however made it above the industrial average with a growth of 23.44%. Chhimek Laghubitta and Rural Microfinance Development Bank stood at the bottom with a growth of 5.00% & 7.10% respectively. By the end of Chaitra, averages bowworings made by microfinances was Rs. 39.66 crore.
Loans and Advances
Loans and advances are the major source of earnings of the companies. Interest are charged against the loans and advances provided by the companies. Increase in deposits solely does not show improvement if the companies cannot justify the growth by increasing its lending in productive sectors. Growth in loans and advances is vital to survive for companies.
The industrial average growth in case of loan disbursement was 37.45%, where 8 microfinances performed better than the industry. Vijaya Laghubitta made it to the top by increasing its loan by 117.10%. ILFCM Microfinance, Mahila Microfinance and Laxmi Laghubitta were also among the top companies. Swabhalamban Microfinance and Chhimek Laghubitta stood at the bottom with a growth of 32.31 and 31.20% resp. By the end of Chaitra, average loans disbursement was Rs 63.36 Crore.
Net Interest Income
Net Interest Income is the income generated by a bank from its core banking activities. Companies provide loan at an interest rate higher than on deposits, which provides the company with their core income. Increase in net interest income signifies that the company has been able to properly utilize its funds by lending in productive sectors.
The industrial growth for the net interest income was 30.24%. 8 microfinances successfully grew it more than the industry average. Laxmi Laghubitta has shown a huge growth in the net interest income and made it to the top. Sana Kisan Bikas Bank, Chhimek Laghubitta and First Microfinance were also among the top growing companies. Their growth was much more than the industry. Although all of them have shown growth, 4 of them are still below the industrial average. ILFCM Microfinance stands at the bottom of the list with a growth of just 14.67% in its net interest income.
Operating Profit is the profit a company earns from its operation related activities. It is a common and an important indicator for measuring a company’s growth since it gives a sense of how much the company can cover its expenses.
In this review period, microfinance companies were able to increase their operating profit by an average of 40.83%. 7 microfinances were found to be above the industry average with Nerude Laghubitta reporting the massive growth of 126.91%
Net Profit is the residual income the company has made after accounting for all its operating & non-operating revenues and expenses. It is one of the most significant indicators since investors gain profit only when the company reports positive net profit.
Laxmi Laghubitta reported the highest net profit growth of 90.26% with Nirdhan Uthhan following it at 78.05%. Vijaya Laghubitta was on the third with 52.07% increase. 50% of the microfinances were above the industry average. Mahila Sahayatra Microfinance has made negligible growth than the corresponding period.
Earnings Per Share (EPS)
Earnings Per share (EPS) is the portion of the company’s profit allocated to each outstanding shares of common stock. Earnings per Share (EPS). It serves as an indicator of company’s profitability. It is out of which the investors can estimate their dividend.
Net Worth Per Share
Net worth per share is the value of shareholder’s equity allocated to each share which consists of share capital and reserves of the company.